Forced Resignation Serves as Basis For Child Support And Alimony Reduction

(Photo credit: Graham Ballantyne)

When the boss says “resign or I’ll fire you,” and you resign, is that a good faith reduction in income?  Can you use your change in income to reduce your child support and alimony?  A recent Supreme Court of Oklahoma opinion orders such a modification.

The parents in Garcia v. Garcia divorced in 2008.  The decree ordered father to pay child support to mother, and to pay support alimony to the ex-wife for 6 years.  At the time of the divorce, father was a school principal.

Father moved to reduce his child support and alimony obligations after he lost his job.  The father testified his superintendent told him to resign or be fired.  Figuring it would be easier to find another job in education if he quit rather than being fired, father chose to quit.  His resignation letter did not say he was resigning under threat of being fired.  Since leaving his job, father testified he’d made 53 job applications and sent 35 resumes, resulting in one interview.

Father asked the court to base his modified support obligations on earnings at minimum wage.  Mother argued that father either resigned his job voluntarily or committed acts that led to his dismissal.  Since father caused the actions that changed his circumstances, he should not be relieved of his support obligations.   The trial court and the Oklahoma Court of Civil Appeals agreed with mother. Both courts reasoned that Father’s job loss was due to his own misconduct, therefore his resignation was voluntarily self-induced. The lower courts relied on earlier case-law holding that voluntary underemployment or unemployment does not justify a reduction in support.

The Supreme Court of Oklahoma tweaked the test a bit after reviewing cases from Oklahoma and other states. Rather than voluntary or involuntary reduction, the test now is whether, based on all the circumstances, a reduction in income is done in bad faith to avoid a support obligation.  “A court must look to the particular circumstances involved and it is critical to determine whether the reduction in income was in good faith or bad faith.” In the Garcia case, the court ultimately determined that father’s decision to resign and not face termination was coerced, and was not done in bad faith to avoid his support obligations.

By David Tracy

 

Settlement Agreement Prevents Child Support Modification Effort

The Supreme Court of Oklahoma gives effect to a settlement agreement between divorced parents requiring both parents to agree in writing to any child support modification.

The parents in Scungio v. Scungio divorced in 2009.  The couple adopted 3 children during their marriage.  Two of the children had special needs.  In a settlement agreement incorporated into a decree dissolving the marriage, the parents agreed as follows:

• Two of the children will likely remain disabled into adulthood, and the parents will remain responsible for them
• Mother will be sole custodian of the minor children
• Father will pay directly to mother a percentage of his salary that exceeds the child support guidelines, and will continue to do so until the children become self-supporting, regardless of age, or go to college and turn 22
• The agreement cannot be modified except in writing signed by both parties (“no modification”)
• The agreement will be construed under the laws of the State of Oklahoma (“governing law”)

After the trial court granted the divorce from the bench, but before the written decree was filed, the Oklahoma Department of Human Services (DHS) entered the case.  DHS was providing services to the children, and was a necessary party for “child support, medical support, and any debt due the State of Oklahoma.”  DHS, who was not a party to the settlement agreement, filed a motion to modify (“reduce”) child support in administrative court.

Mother moved to dismiss DHS’s motion.  She argued the “no modification” provision of the Settlement Agreement required the parents to agree in writing to modify child support.  Father, seizing an opportunity provided by DHS, argued that the “no modification” provision of the Agreement directly conflicts with the “governing law” provision.  This created an ambiguity, according to father.  As a result, the Agreement cannot serve as a clear waiver of the application of statutes allowing or child support modification.

The administrative law judge kicked the case to district court.  The trial court denied mother’s motion to dismiss, and held that the parties’ agreement did not waive application of the statute allowing for  modification of child support. Mother appealed.

The Supreme Court of Oklahoma reversed the trial court, saying the parents “clearly demonstrated their intent that there be no modification of child support without their mutual assent.”  The DHS motion must be dismissed.  The trial court must still decide the amount Father is behind in his child support payments and set a payment schedule for arrears.

The court also decided an important procedural issue in this case.  District courts and DHS administrative courts have concurrent jurisdiction over child support matters.  As a result, it is not necessary for a moving party to file a new motion to modify child support once a case is transferred from administrative court to district court.
by David Tracy

Couple Still Fighting Over House Ten Years After Divorce

People getting a divorce generally do not make good business partners.  One Oklahoma couple learned this the hard way.  After trying to maximize the return on their marital residence, they ended up back in court ten years later.

The Original Plan
When the couple divorced in 1995, they entered into a settlement agreement which placed the marital residence  in a Trust “established for the purpose of holding title to and selling same.”  Their stated goal was to get the highest and best price for the house.  The trust provided that wife would continue to live in the house.  Neither the trust nor the settlement agreement were incorporated into the decree dissolving the marriage.

The Plot Thickens

Ten years pass without an offer on the house.  The wife still lives there, and is renting rooms to tenants.  Husband files suit asking the court to remove wife as trustee, and appoint a receiver for the house.  After a contested hearing, the trial court first took control of the trust and ordered the parties to cooperate in selling the house.  After 10 months passed without a sale, or even a listing agreement, the trial court appointed a receiver to take control of the property.  Wife appealed, and the Oklahoma Court of Civil Appeals affirmed the appointment of a receiver.

The Lesson Learned
Despite the best laid plans of the couple, they failed to maximize their investment in the marital residence.  The take-away from this couple’s misfortune – do your best to sever all financial ties to your former spouse in the divorce documents.  Lingering financial connections leave opportunity for continuing discord, and abuse of fiduciary relations.

by David Tracy

What Will Your Divorce Ceremony or Ritual Look Like?

The legal process of divorce does nothing to heal the emotional pain caused by ending a marriage relationship. Filing final papers in court makes you legally single, but healing the damage to your psyche follows an unrelated timetable.  Divorce can be even more traumatic than the death of a loved one. Instead of a loss fixed in time, the end of a marriage can seem like a death of a thousand cuts.

Like a marriage ceremony brings two people together, a divorce ceremony or ritual places you and your spouse on separate paths and promotes emotional healing.  It can be a private ritual involving just yourself, your immediate family, or one or two close friends.  You can involve a larger group of people, and help them feel more comfortable about the breakup as well.  It can be as elaborate or as simple as you choose.  There is even a newly published book with suggested divorce rituals.  The important point is to give it meaning that promotes dignity, respect and healing.

Robert Fulghum (Photo credit: Wikipedia)

Author Robert Fulghum writes about ritual as follows: “Meaningful rituals have a lot to do with gaining that inner harmony and making letting go as much a part of life as holding on.  Rituals anchor us to a center while freeing us to move on and confront the everlasting unpredictability of life.  The paradox of ritual patterns and sacred habits is that they simultaneously serve as solid footing and springboard, providing a stable dynamic in our lives.”  From Beginning To End, the Rituals of Our Lives.  Random House, 1995 (p. 265).

A divorce ceremony or ritual serves an important dual purpose.  It helps you let go of the past – to place a period on a chapter of your life.  You are then free to spring into the next chapter of your life – minus the burdens you intentionally leave to the past.

Too much analysis of your divorce ceremony can lead to paralysis.  Give some thought to what works for you, but don’t be afraid to trust your instincts.  Your divorce ceremony can be as elaborate as a wedding reception (complete with divorce vows), or as simple as a meditation (or smashing something into small pieces).  You and your ex might plan something together.  Your circumstances might call for you to plan an event on your own.  Any ritual or ceremony that speaks to you will work, but it does require some action on your part.  The internet has resources to plan your divorce ritual or ceremony.  Do some research.  Talk to your counselor, your spiritual advisor, or a close friend. Don’t just read about it or think about it.  Plan it and do it.  You’ll be glad you did.

by David Tracy

Obamacare And Divorce – It’s Still Complicated

(Photo credit: Mike Licht, NotionsCapital.com)

The U S Supreme Court largely upheld the Patient Protection and Affordable Care Act of 2010 (ACA) last week.  The ACA provides more options in coming years for divorcing families who face health care choices.  However, many of the means to the end of making health care more  available and affordable remain to be set. The major goals of the ACA, and its promise for the divorced population, still hang in the balance.

Over the course of ten years, nearly half of the non-elderly population will go without health insurance for some time (U.S. Dept. of Treasury 2009).  Many of these people lose coverage due to a divorce. A lack of cost-effective alternatives often leads to gaps in health insurance.

The traditional method of continuing coverage for the last generation is COBRA (named for the Consolidated Omnibus Budget Reconciliation Act which created it).  COBRA allows someone no longer eligible for group coverage to continue on the policy as an individual for up to 36 months after a divorce.  The employer contributes nothing to the coverage cost, making it cost-prohibitive for many.

If COBRA coverage is not practical, one historically had to explore other alternatives.

• Find a job with a group health benefit.
• Buy coverage in the individual health insurance market.
• Qualify for a public program such as Medicaid or the Children’s Health Insurance Program (SoonerCare in Oklahoma).
• Go without insurance, cross your fingers and hope for good health.

Those with pre-existing conditions faced added challenges, as they are thrown into high-risk pools with high costs and coverage exclusions.   Many private insurers will decline coverage, make it unaffordable, or make it ineffective with exclusions.  This will change quite a bit under the ACA.

Some changes under the ACA are already in effect.

• Health plans cannot drop your coverage when you develop an illness or medical condition.
• You may cover your children on your group health policy up to age 26.
• Your children will not be denied coverage based on a pre-existing condition.
• Your plan cannot impose annual or lifetime dollar limits for essential health benefits.
• The Oklahoma Temporary High Risk Pool provides a bridge program to temporarily cover people who cannot get coverage elsewhere due to pre-existing conditions.  You have to go uninsured for 6 months to qualify for temporary high-risk coverage.

Some changes easing the challenge of post-divorce insurance planning do not take effect until January of 2014.

• If not covered by an employer plan, people must either get health insurance on their own, pay a penalty on their income tax, or qualify for an exemption.
• States, or the federal government by default, will set up health insurance exchanges.  These exchanges will outline the competing health insurance plans available to you, and the premium for coverage.
• The exchange will also offer calculators to figure cost-sharing reductions and premium tax credits available depending on your income and coverage.
• The amount of the subsidy you’re eligible for will depend on your income. Those with incomes of up to 400 percent of the federal poverty level ($43,560 for an individual and $89,400 for a family of four in 2011, according to the Kaiser Family Foundation) are eligible for premium assistance credits.

The exchanges hold promise for an added cost-effective alternative for divorcing spouses and families.  the U. S. Secretary of Health and Human Services must develop rules for making premium tax credit eligibility determinations based on changes in circumstance, such as a divorce.  We should all stay alert to the when and how of the exchanges, and the premium subsidies.  They will become part of divorce planning very soon.

by David Tracy

Sources:
Link to Text of the Affordable Care Act

How the Affordable Care Act Affects You, CBS News Money Watch, June 29, 2012

The Promise of the Affordable Care Act, the Practical Realities of Implementation: Maintaining Health Coverage During Life Transitions, O’Leary, Capell, Jacobs, and Lucia, Center for Labor Research and Education, University of California, Berkeley; Chief Justice Earl Warren Institute on Law and Social Policy, UC Berkeley School of Law (2011)

Health Reform Subsidy Calculator, Kaiser Family Foundation

Supreme Court Ruling Making Medicaid Expansion Optional Gives Fallin A Big Decision, Tulsa World, July 3, 2012